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"The main driver in the financial sector is the earnings from the banks and their numbers were pretty much across the board above expectations – although there were some hiccups with underlying issues with CIBC," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.

TD Bank Financial Group (TSX: TD) said profits declined 27 per cent from a year ago to $618 million. Its shares were up $3.41 to $53.69 as the bank reported that provisions for credit losses rose to $656 million from $232 million a year ago.

National Bank (TSX: NA) shares ran up $1.80 to $51.30 after it said the relative strength of the Quebec economy helped offset charges related to asset-backed commercial paper in the second quarter, leading to a 46 per cent jump in profit to $241 million.

The Bank of Nova Scotia reported quarterly net income of $872 million, down 11 per cent from a year-ago although revenue grew 12 per cent to a record high.

Scotiabank's provision for credit losses ran up to $489 million, compared with $153 million in the second quarter of last year and its shares gained 15 cents to $37.90.

CIBC (TSX: CM) lost $51 million during the second quarter, down sharply from a $1.1 billion loss the bank handed in a year ago.

But its shares declined $2.56 to $54.47 as CIBC said the recent quarter's loss was partly attributable to a $324-million loss on structured credit activities.

Royal Bank (TSX: RY) reports results on Friday and its shares bounded ahead $1.50 to $45.50.

In the U.S., indexes lifted after solid demand at a Treasury auction eased fears that the appetite for U.S. debt would dry up and force the government to pay higher interest rates to entice buyers. That in turn could endanger an economic recovery by driving borrowing rates higher.

The Commerce Department reported that U.S. home sales rose 0.3 per cent in April to a seasonally adjusted annual rate of 352,000, which was lower than expectations.

The median sales price fell to US$209,700, a 14.9 per cent drop from a year earlier. Sales were down 34 per cent from April 2008.

The Commerce Department also said orders for durable goods rose by 1.9 per cent in April, more than four times the 0.4 per cent increase that had been expected.

But the government revised down its estimate for new orders in March to show a drop of 2.1 per cent, a much bigger fall than the 0.8 per cent decline previously reported.

The TSX energy sector was up 3.5 per cent as the July crude contract on the New York Mercantile Exchange rose $1.63 cents to US$65.08 a barrel as U.S. government data showed a surprise drop in last week's crude inventories.

Also, OPEC decided to maintain current production levels unchanged at the end of the cartel's meeting in Vienna.

"They said they are already seeing an increase in demand, that's very encouraging," added Dowty.

"And some of the economic numbers lends to itself that crude over the long period is going to go higher."

Canadian Natural Resources (TSX: CNQ) gained $2.77 to C$64.52 while Suncor Inc. (TSX: SU) moved up $1.65 to $38.76.

The gold sector rose four per cent as the August bullion contract moved up $5.80 to US$963.20 an ounce. Goldcorp Inc. (TSX: G) improved $1.11 to $43.17.

General Motors Corp. said today a committee of bondholders has agreed to a sweetened deal proposed by the U.S. government to erase the automaker's unsecured debt in exchange for company stock.

In addition to the 10 per cent of the stock in a newly formed GM that was originally rejected by bondholders, the new offer would give them warrants to acquire an additional 15 per cent stake at a deep discount. That would come only if they agree to support selling the company's assets to a new company under bankruptcy court protection. But it's still expected GM will seek creditor protection Monday.

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